According to sources in Petroleum Ministry, Iraq has agreed to invest in Indian Oil Corporation’s 15 MTPA refinery at Paradip in Odisha. Rs. 29,777 crore project is scheduled for completion in November this year.
It may be recalled here that IOCL had tried unsuccessfully to rope in a partner for the project in the past too. Initially, Gulf Oil, a Hinduja group company, had shown interest in the project. However, the company opted out of the project as IOCL was not willing to give minimum 26% stake in the company as was demanded by Hindujas. Later, the Kuwait Petroleum Corporation also left the project over ownership and plant capacity issues. When, IOC’s negotiations with Petronas of Malaysia and Saudi Arabian Aramco and Abu Dhabi National Oil Co. for equity participation failed, it decided to implement the project on its own.
The project, like any other public sector refinery project, has seen inordinate delay. Even after IOCL decided to go it alone, the project could not move further as the state government refused to extend the incentives and tax concessions asked by the oil PSU. Finally, work on the project started more than 10 years after the initial PIB approval in 1998. In the process project profile too underwent drastic changes. Initially, it was planned to set up a petrochemical complex with an investment of Rs. 25,000 crore. Finally, IOCL settled for just a refinery of 15 MTPA and a captive power unit with a generation capacity of 366 MW.
Now, with Iraq agreeing to invest in the project (though tentatively), fund starved oil PSU may get much deserved relief at last.